Impresionante mercado de smartphones en China

Read more »

La geografía de los startups exitosos

La correlación entre donde surgen las emprendimientos y como de bien les va
Silicon Valley es el lugar para estar
Por Dan Moren - Popular Science




Hay un montón de factores a considerar al fundar su emprendimiento- pero que no puedan quedar considera mucho es la ubicación. De acuerdo con un reciente informe de investigación publicado en Science, ciertos lugares tienden a tener una mayor representación de empresas exitosas.
El candidato a Ph.D. del MIT Jorge Guzmán y profesor del MIT de Scott Stern, han analizado la tasa de éxito de las emprendimiento en varias ciudades de California. Por supuesto, el "éxito" es difícil de medir, pero en este caso, Guzmán y Stern empresas que, dentro de los seis años de su fundación, ya sea tenían una oferta pública inicial (IPO) o fueron adquiridas por otra empresa seleccionada. Lo que encontraron fue que ciertas áreas son puntos de acceso definidos en términos de la cantidad de empresas exitosas.
Como era de esperar, Silicon Valley tiende a tener un número desproporcionado de casos de éxito, superando a las ciudades clasificación más baja de California por un factor de 90, e incluso las ciudades medias en un factor de 20. En comparación con otras ciudades, San Francisco fue uno de los de mayor éxito, mientras que Los Angeles tendía a rendir menos.
Sin embargo, incluso dentro de esas áreas, los datos también mostraron que los éxitos tienden a congregarse cerca de las instituciones de investigación científica prominentes, como Stanford, UC Berkeley, Livermore Labs, y Caltech.
La ubicación no es el único factor que Stern y Guzmán exploradas. Encontraron un número de otras tendencias distintas: por ejemplo, las empresas con nombres cortos son un 50 por ciento más probabilidades de crecer que aquellos con nombres largos. Y las empresas que establecieron las patentes o se incorporaron en el estado de Delaware fueron más de 25 veces más probabilidades de crecer que los que no pudieron - juntos, esos dos factores aumentan la probabilidad de que el crecimiento en casi 200 veces.
Por supuesto, nada de esto se debe interpretar como un modelo para el éxito de su próximo emprendimiento. Las empresas que no logran un crecimiento exitoso siguen siendo mucho más comunes que los que lo hacen.

Read more »

Carrera de armas en Internet

The first-ever botwall could change the economics of hacking forever
By Tim Fernholz @timfernholz


This machine kills hackers. Shape Security

For companies with data to protect, their primary problem is how cheap hacking can be.

While “hacking” encompasses a wide variety of activities, one company is specifically tackling the botnet problem: The ability to use a network of linked computers to overwhelm a website or break into user accounts.

A denial of service attack is probably the most well known kind of attack using botnets. But for $200, you can put 10,000 computers around the world to work on whatever nefarious purpose you prefer.

Shape Security is trying to put a stop to that with a new product, unveiled today, called Shape Shifter. It is a “botwall,” a hardware device that companies plug into their servers to protect their data and users by automatically scrambling web application code when users try to access it.

“Today, it’s extremely cheap for an attacker to bring down a website,” says Shuman Ghosemajumder, the company’s product lead. The idea is to make hacking a human endeavor again: If bots won’t work, hackers will face more time and expense to do the dirty work themselves, or hire others to do it for them (Picture the gold farmers of World of Warcraft.)

Learning from hackers

“In the world of security, most people are trying to prevent something from happening…a lot of the engineering was, ‘how do I detect a bot or malware and prevent it from landing?’” says Ted Schlein, a former Symantec executive turned cybersecurity investor at venture fund Kleiner Perkins Caufield Byers. But today, “there’s really only two kinds of companies, those who have been breached and know it and those who have been breached and don’t know it. You have to have a mental shift—’you know what, I give, they’re there, I’m going to render them ineffective.’”

When you log into a site like an online bank or Facebook, you are connecting to a secure web application—a piece of code that runs on the web and handles the secure transfer of information such as a password. With an application installed on a phone or computer, hackers would need to reverse-engineer (i.e. figure out how it works from what it does) the code to learn how it works. But a web app’s code is visible to anyone who looks so web browsers can run them. Hackers seeking to crack systems can look at that code and write scripts to exploit it—maybe they purchased some of the credit card info stolen from Target, for instance, and want to exploit the code at an online shopping site to make as many online purchases as fast as they can. Or perhaps, unbeknownst to you, some malware is tracking your keystrokes as you log into your bank account.

The challenge is allowing people in while keeping bots out. Current methods, including identifying IP addresses or limiting the number of times someone can log in, are easily surmountable. So Shape decided to learn from hackers, and adopt a different defense. Many kinds of malware rely on code that changes its appearance to avoid detection by anti-virus software, a tactic called “polymorphism.”

Shape’s flagship product replicates the polymorphism effect but for web applications, rewriting the code each time a page is reloaded. That means that bots have no frame of reference when searching for vulnerabilities to exploit—instead of seeing a variable name like “username” or “password,” they see new names like “v6DbNQEs4z” each time the site is reloaded. The website looks the same to you and me, but the bots can’t pick the lock if they can’t find the keyhole.

The “mystery” start-up

Since the company was founded in 2012, it has raised $26 million in venture funding, including a round lead by Schlein, who joined the board, and Google Chairman Eric Schmidt. This, while the company’s product was working in “stealth mode”—no one knew what Shape was developing or if an actual product was forthcoming.

Whenever you hear about a company raising lots of money with no product, it hardly sounds good—think Clinkle, the Stanford payments start-up that raised both $25 million and the level of dysfunction in Silicon Valley. When I first heard about Shape, I wasn’t sure it was a real product.

But it’s hard to argue with the staff the company assembled, among them CEO Derek Smith, who sold cyber security firm Oakley Technologies to Raytheon in 2007; Sumit Agarwal, Google’s first product manager; Michael Coates, the former head of security for Mozilla; and Ghosemajumder, who helped develop the technology that prevents Google ad click fraud.

Into the field

Shape Shifter has been in trials with companies like StubHub, the online ticket re-seller, and Citigroup, whose head of security praised it for “turn[ing] the cost equation back around in the defender’s favor.”

With the company’s product finally revealed, it will meet the most important test: Hackers seeking to break it. Perhaps more sophisticated scripts could circumvent the polymorphism: I asked Coates whether a bot could somehow link to user prompts for information to the scrambled code behind the scenes, and he said that was the first thing Shape expects hackers to try—and that the company “will be ready with the next six or seven moves.”

If the botwall works as promised, Shape’s executives and investors predict large demand: Virtually any company doing business online—banks, retailers, social networks, the government, you name it—will want to protect against swarming online hackers, who cost American businesses as much as $100 billion each year.

Quartz

Read more »

20 meses es el tiempo de vida de las startups

Death and startups: Most startups croak 20 months after their last funding round

Sam Howzit/Flickr

Ricardo Bilton

For most startups, death is not a question of if, but when.

While that conclusion may seem obvious, the data to support it is pretty hard to come by. Which makes sense: After all, no one — not founders, not venture capital firms — is going to go out of their way to tell the world when they’ve failed. But they will trumpet their victories. It’s the survivorship bias in full effect.

Still, research firm CBI Insights has managed to get some good data on startup death, which happens a lot more than all the funding news would lead you to believe. Here are some of the most interesting findings:

Most die young. Considering how vulnerable most early-stage companies are, it’s not surprising to learn that over half of them die before they raise $1 million, and 70 percent die before raising $5 million. Most dead companies raised $11.3 million on average, with a median of $1.3 million.

Cash doesn’t (always) buy longevity: But even raising cash won’t save most startups from death. CBI Insights says that, on average, startups will last 20 months after their last founding round (though many will keep lumbering on long after).

Most dead companies are Internet companies. By sector, most dead tech companies were focused on the Internet, which makes sense considering that that’s where all the money has been over the past few years. More Internet companies chasing VC cash means more dead Internet companies. That much is inevitable.

Social is bad news. If you’re trying to launch your own tech company, do yourself a favor and stay out of social, which most of the dead startups focused on. Same goes for marketplace companies (i.e., eBay wannabes) and those dabbling in advertising, sales, and marketing.

What’s especially funny about these numbers is that CB Insights is using them to sell its list of “dying tech companies,” which it’s selling for nearly $7,000. That list, the company says, would be valuable for anyone looking for potential employees or even just products or IP.

Maybe Yahoo will be interested?

Read more »

Como el emprendedorismo digital puede ayudar al Mundo

Cómo los emprendimientos digitales desarrollarán al Mundo
Por Michael Chui y James Manyika

Los empresarios locales están impulsando el crecimiento de Internet en los mercados emergentes, y eso es una buena cosa. Así es como los políticos y los operadores de telecomunicaciones pueden ayudar.

Esta columna es parte de una serie en curso, publicado originalmente por McKinsey & Company, acerca de cómo los empresarios están haciendo un impacto en la sociedad en todo el mundo.

En las economías avanzadas, los esfuerzos de los empresarios innovadores han impulsado el crecimiento impresionante en el uso de Internet y el impacto en los últimos 20 años. Emprendimiento de Internet en los mercados emergentes ha recibido mucha menos atención, pero tiene importantes implicaciones para el crecimiento económico y el progreso social. Se estudió recientemente el impacto de Internet en los " países que aspiran ", definidos como teniendo el tamaño de la economía y el dinamismo de ser actores importantes en la escena mundial en un futuro próximo y alcanzar niveles de prosperidad se aproximan a las de las economías avanzadas.

Se identificaron 30 países que aspiran en todo el mundo, con un PIB colectivo en 2010 de $ 19000 mil millones, o el 30 por ciento del PIB mundial. Muchos de estos países - por ejemplo, China y México - que ya son actores importantes en la economía global. Sin embargo, ninguno de ellos ha alcanzado la riqueza per cápita y la prosperidad se ve en las economías avanzadas.

En 2010, los 30 países en la categoría de los aspirantes a todas tenían el PIB nominal encima de 90 dólares millones de dólares y el PIB nominal per cápita entre $ 1.000 y $ 20.000. El PIB nominal per cápita creció a una tasa compuesta de crecimiento anual de más del 3 por ciento entre 2005 y 2010.

Empresarios de Internet en los países que aspiran a menudo son también emprendedores sociales, en que crean el ecosistema que permite a los individuos, las empresas y los gobiernos desempeñen un papel más importante en la economía de Internet. Los aumentos en el uso de Internet y las mejoras de infraestructura han permitido a los empresarios en los países que aspiran a crear nuevos modelos de negocio. Desde adaptaciones exitosas de aplicaciones Web populares de países desarrollados para el comercio electrónico y plataformas de políticas públicas, los empresarios han traído nuevos servicios, productos expandidos, y contenido más profundo al alcance de los usuarios en los países aspirantes.

Con cerca de 150.000 empresas relacionadas con Internet comenzaron cada año en los países que aspiran, los empresarios han impulsado gran parte del crecimiento de los ecosistemas de Internet. Ellos están construyendo las bases que los consumidores y las empresas pueden entonces aprovechar. El Internet en los países que aspiran también contribuye a la creación de empleo. En el sector de la pequeña y mediana empresa, los encuestados informan que 3,2 empleos son creados por cada 1 puesto de trabajo perdido a causa de Internet.

Emprendimientos para observar

El espíritu empresarial en los países aspirantes se ha visto estimulado por la demanda de los recursos localizados a restricciones tales como los cuellos de botella logísticos, el bajo acceso al crédito, y la fuente de alimentación intermitente.. " Generador de respaldo para la Internet " En Kenia, por ejemplo, la tecnología sin fines de lucro Ushahidi ha desarrollado un dispositivo llamado el BRCK, descrito como un Su objetivo es abordar los desafíos de hacer una conectividad más fiable - incluso cuando no hay electricidad. El objetivo del proyecto es mantener a los usuarios conectados con un mínimo esfuerzo por mover sin problemas entre Ethernet con cable, Wi -Fi, y las zonas de datos móviles y el cambio a una robusta batería incorporada de forma automática cada vez que la red eléctrica de baja.

Otros problemas comunes incluyen servidores insuficientes seguros de Internet por habitante, bajo ancho de banda promedio por cápita y la penetración limitada de los ordenadores. Sin embargo, los empresarios de Internet están adaptando sus modelos de negocio para superar estos cuellos de botella. En la India, por ejemplo, un proyecto empresarial como el lugar de trabajo Naukri.com utilizan voz basado en el teléfono y los servicios de mensajes de texto para complementar sus servicios basados ​​en la Web, lo que proporciona una mayor facilidad de acceso.

En muchos países aspirantes, el uso de las transacciones financieras en línea está todavía en su infancia y se desarrollará sólo como habilitadores críticos - como la protección legal contra el fraude - ser más fuerte. En la India, los sitios en línea de venta de billetes, como Redbus.in ofrecen a los clientes la opción de pago en efectivo a la entrega física de las compras en línea como una alternativa al uso de tarjetas de crédito en un sistema se percibe como inseguro. Entendemos la innovación similar alrededor cuellos de botella logísticos. Por ejemplo, uno de los más grandes jugadores por menor en línea de la India, Flipkart.com, ha desarrollado sus propias operaciones de logística para ahorrar en gastos de comisión de mensajería y reducir el tiempo de entrega en ciudades más pequeñas.

En Mozambique, por su parte, una startup llamada moWoza utiliza la mensajería de texto y una aplicación de teléfono inteligente para conectar los comerciantes informales con los taxistas disponibles que pueden entregar los paquetes a los mayoristas, la creación de un más rápido, la cadena de suministro basadas en móvil. La compañía tiene como objetivo hacer que el comercio transfronterizo más formal y eficiente, posicionándose como un jugador importante del comercio móvil que puede proporcionar servicios de seguimiento y entrega.

Muchas nuevas empresas en los países aspirantes han replicado los modelos de negocios exitosos creados en los mercados desarrollados, mientras que al mismo tiempo que se adapta a las condiciones locales únicas. Turquía, por ejemplo, cuenta con un joven pero creciente sector de los diarios - ofertas nuevas empresas según el modelo de las empresas occidentales, como Groupon y Living Social. Otros aspirantes a empresarios de los países han desarrollado productos que tienen el potencial de llegar a los mercados mundiales. Prezi de Hungría es una herramienta basada en la nube que permite a los usuarios crear presentaciones como si estuvieran en un gran lienzo en lugar de una serie de diapositivas. Prezis se crean para contar historias, con la presentación de zoom hacia atrás y adelante a diferentes partes de la tela. Prezi otorga libre acceso a sus servicios a los clientes que permiten Prezi para publicar su trabajo. Los clientes que deseen presentaciones privadas pueden optar por pagar por servicios premium. Desarrollado por primera vez en 2007, Prezi ya ha recibido financiación de la serie de conferencias TED ya partir de Sunstone capital de Dinamarca.

Todavía otras empresas frente a los retos sociales que van desde el tráfico urbano con la salud y la seguridad pública. En 2010, un equipo de jóvenes empresarios egipcios lanzó Bey2ollak, una aplicación móvil y basada en la Web que ofrece en tiempo real, actualizaciones de tráfico crowdsourced. La idea fue concebida como una respuesta a la frustración de los fundadores con el tráfico de El Cairo. El día del lanzamiento de la aplicación, que ganó 5.000 usuarios y una oferta de colaboración de Vodafone Egipto. El servicio atrajo a 46.000 usuarios registrados en menos de un año.

Círculos virtuosos

En la mayoría de los países desarrollados, la Internet se ha logrado un círculo virtuoso. Con la infraestructura adecuada y una amplia base de usuarios, las entidades de Internet prosperar, ofreciendo productos y servicios para generar ingresos. A su vez, esas organizaciones prósperas ayudan a invertir en infraestructura y promover el uso de Internet. Los ejemplos incluyen Amazon, Apple y Google, que se han convertido en gigantes, mientras que la promoción del uso de Internet y permite a los jugadores nuevos a entrar en el paisaje.

En China, el mercado de comercio electrónico Taobao está empezando a desempeñar un papel similar. Taobao es el mayor mercado en línea dirigida al consumidor de China, proporcionando una plataforma de lanzamiento para más de seis millones de e-comerciantes. Taobao ha invertido mucho para construir los sistemas de pago y promover el tráfico enorme. A su vez, estas medidas han reducido las barreras de entrada para las pequeñas y medianas empresas y microempresas que venden en el sitio. Esto también ha creado oportunidades para nuevas empresas en el apoyo a los servicios, como la publicidad en línea, TI, entrega rápida y el almacenamiento.

La plataforma de comercio electrónico Mercado Libre con sede en Argentina ha seguido un camino similar en lo que el modelo de mercado electrónico para América Latina. Sin embargo, la mayoría de los países que aspiran están lejos de lograr este círculo virtuoso. La falta de infraestructura se correlaciona con baja madurez y uso de Internet. La escasez de las fuentes de financiación complica este problema.

La escasez de capital de riesgo es un gran obstáculo para la iniciativa empresarial en línea en los países aspirantes. La inversión extranjera directa entrante en tecnología de la información y la comunicación tiende a centrarse en los grandes proyectos de telecomunicaciones o los negocios en Internet, que ya han alcanzado la escala. En la mayoría de los países que aspiran, el alto costo del capital limita el acceso empresarial a los préstamos y la inversión inicial. Como resultado, incluso los empresarios con el crecimiento prometedora a menudo tienen dificultades de escala.

En algunos países aspirantes, nuevas empresas se centran en proporcionar las herramientas y el capital que startups innovadoras necesitan para crecer. Por ejemplo, la incubadora de Nigeria Wennovation Hub tiene participaciones en nuevas empresas de tecnología y otras empresas prometedoras a cambio de instalaciones, tutoría, acceso a Internet, servicios legales, y oportunidades de financiación. Los empresarios gastan seis a nueve meses en el centro, a partir de un curso de formación empresarial obligatoria y luego se centra en la manera de transformar el producto inicial para que esté listo para el mercado, así como el trabajo en estrategias de entrada de éxito. El objetivo a largo plazo es crear una comunidad de inversores de inicio próspero en Nigeria.

Una agenda de política basados ​​en Internet

Los formuladores de políticas en los países que aspiran pueden ayudar a los empresarios en línea mediante la reducción de las barreras al registro de una empresa y facilitando el acceso al capital. Algunos países han hecho a través de las organizaciones de capital de riesgo financiados por el gobierno. Fondo numérico Maroc Marruecos, por ejemplo, se centra en la provisión de capital de primera ronda a empresas de Internet.

Los gobiernos también pueden fomentar el ecosistema de Internet mediante la promoción de los costos de acceso a Internet bajos y una amplia cobertura de Internet y mediante el fomento de la alfabetización digital. Programa Umbral digital de Sudáfrica creó una red de sistemas informáticos en las comunidades rurales, diseñado para aumentar la alfabetización informática y proporcionar, programas de aprendizaje impulsados ​​por las comunidades informales. Los gobiernos pueden incluso establecer centros de innovación. Un ejemplo prometedor es en Kenia, donde una asociación público -privada se está desarrollando la nueva Konza Techno Ciudad como un centro para empresas de alta tecnología.

¿Cómo pueden ayudar los Operadores?

Los operadores de telecomunicaciones en los países aspirantes tienen un papel crucial que desempeñar en la creación de las condiciones que los empresarios de Internet necesitan para prosperar. Pueden promover la rápida expansión de los servicios móviles de datos por el despliegue de la fibra de última milla y la satisfacción de necesidades de los usuarios para conexiones rápidas y fiables. Deben optimizar la asignación de red entre voz y datos y fomentar el uso de la tecnología de compresión de datos y almacenamiento en búfer. El crecimiento de los datos móviles ayudará a compensar la disminución de los ingresos de voz, y los operadores que llevan en esta área serán los ganadores en el largo plazo.

La clave será la creación de demanda de los consumidores. Los usuarios deben de precios claro y previsible, no sólo precios asequibles para los servicios de Internet. Los operadores deben implementar planes de precios y fáciles de entender, ya sea basado en minutos o aplicaciones. Para evitar las facturas exorbitantes, que pueden reducir la velocidad cuando se alcanzan los límites de uso. Paquetes y paquetes de menor velocidad podrían estar disponibles a un precio de nivel de entrada. La introducción de dispositivos de bajo coste y el establecimiento de un mercado de teléfonos inteligentes de segunda mano son otras maneras de aumentar su uso.

Los operadores deben enseñar a los clientes cómo utilizar sus servicios y hacen molestia libre configuración (tal vez por la preinstalación de los servicios de Internet en sus dispositivos ). También pueden ofrecer a los clientes la opción de pagar una prima para las velocidades mejoradas, la creación de una mayor facilidad de uso para los consumidores. Más allá del mercado de consumo, no habrá grandes oportunidades para usar la red móvil para ofrecer servicios a los clientes de negocios.

Pensamientos de Cierre

Con el crecimiento de Internet en cualquier lugar - ya sea en el mundo desarrollado o en desarrollo - que viene más amenazas y las posibilidades de uso indebido. Hay grandes y crecientes preocupaciones con respecto a la piratería, la ciberdelincuencia, el ciberterrorismo, y la privacidad. Estas son preocupaciones reales que requieren una acción concertada y coordinada. Sin embargo, el poder de Internet para impulsar el crecimiento y la prosperidad es mucho mayor que los riesgos, por lo que estas preocupaciones no deben ser una excusa para limitar el crecimiento y el uso de Internet.

Michael Chui es director del Instituto Global McKinsey. James Manyika es director de la oficina de San Francisco de McKinsey y director del Instituto Global McKinsey.

Inc.com

Read more »

Evidencia de que el sector tecnológico esta inmerso en una burbuja masiva

Here's The Evidence That The Tech Sector Is In A Massive Bubble

JIM EDWARDS -  Business Insider

The stock market is at an all-time high. Tech startups with no revenue have billion-dollar valuations. And engineers are demanding Tesla sports cars just to show up at work.

Here's the evidence that we're in a new tech bubble, heading for a crash, just like the dot com bust of 1999.

Interest rates are effectively at 0%.

Fred / Think Progress

Before we get into specific evidence that the tech sector is inflated, it's worth restating the macro-economic context: Interest rates are basically at zero and have been for some time. When borrowers are paying close to zero interest on loans, that makes money cheap to get. This chart shows the Fed's target rate for interest since 1970.

People with money generally have a choice: save it in interest-paying, risk-free bank accounts or invest it in riskier assets that may pay more money over time. When interest is at zero, virtually any other kind of investment is likely to pay more because the risk-free alternative is so lousy. So investment asset bubbles get created. Stocks tend to go up.

The stock market is at a peak, which is exactly what you'd expect in a zero-interest environment.

Yahoo Finance / Jim Edwards

We've had five years of solid growth in stocks. People who have invested in stocks in the last five years now feel very, very rich. What could possibly go wrong?

The market moves up and down, in cycles, as this chart of the S&P 500 stocks shows.

We're due for a downturn.

(BlackRock CEO Laurence D. Fink, whose company manages $4.1 trillion in assets, agrees that the Federal Reserve is creating “bubble-like markets.”)

In the tech sector specifically, there has been a recent run-up in deal prices.

Thomson Reuters / PricewaterhouseCoopers

This chart was published by PriceWaterhouseCoopers, which tracks merger and acquisition activity in the tech sector.

It notes that "software deal volume tripled that of the second quarter."

The driving force?

High stock prices and corporate giants who are rich with cash and need to invest it, PwC says.

It's not just tech asset prices that are high. Salaries are high, too.

While unemployment generally may be high, in the tech sector it is very low.

REUTERS/Edgar Su

Tech companies, led by Mark Zuckerberg at Facebook, are lobbying Congress to relax immigration rules so they can hire more foreign talent because they believe domestic talent has gotten too scarce and too expensive. It's driving up wages bills like crazy. Matt Allen, a tech recruiter at Vertical Move, told me recently:

We're experiencing first hand greater insanity than the dot-com days when Interwoven Software was pulling out BMW Z3's for engineers who joined. Instead, we're seeing sign-on bonuses for individuals five-years out of school in the $60,000 range. Candidates queuing-up six, eight or more offers and haggling over a few thousand-dollar differences among the offers. Engineers accepting offers and then fifteen minutes before they're supposed to start on a Monday, emailing (not calling) to explain they found something better elsewhere.

That suggests that wages in tech are in a bubble.

Want an example?

Twitter svp/technology Chris Fry got a $10 million pay packet. He only joined the company last year.

Twitter

Twitter's Chris Fry comes with a high price.

Fry is paid more in annual compensation that Jack Dorsey, the chairman of Twitter's board and the founder of the company.

That's how much the price of wages has risen in the tech world. Fry is not a one-off event. Facebook's vp/engineering, Mike Schroepfer, got $24.4 million in 2011, Reuters noted:

One start-up offered a coveted engineer a year's lease on a Tesla sedan, which costs in the neighborhood of $1,000 a month, said venture capitalist Venky Ganesan. He declined to identify the company, which his firm has invested in.

It's not just wages that are expensive. Company valuations are rising too. 

Supercell, the game company, just raised $1.5 billion in new funding at a valuation of $3 billion. Supercell has real revenue — $178 million in Q1 alone. But you've got to question the logic of the people doing the deal: Investor Masayoshi Son, the founder of Softbank, believes he has a "300-year vision" of the future.

Even the CEO of Supercell thought he was joking when he first heard about it.

Companies with broken business models are highly valued.

Jason / Goldberg / Facebook

Fab CEO Jason Goldberg

Fab.com, the design retailer, recently raised $165 million in new investment this year, for a total of $336 million in all venture funding. It did so despite laying off 440 employees after deciding that the flash sales model — in which customers are asked to suddenly purchase a daily deal — doesn't work. It was Fab's second business model "pivot" — the company started life as a gay community site.

We're not saying Fab is going out of business. We're saying that Fab's backers have been fabulously generous.

Companies without meaningful revenue are highly valued.

Natasha Foote / Pinterest

Pinterest just raised $225 million in new investment funding, a stake that values the company at $3.8 billion. That valuation is fictional, of course. It's based on the notion that the company could be sold or go public at that price. That price is 10 times what investors have actually plowed into the company.

To be clear, Pinterest is showing every sign of turning into a great company. It has already solidified a role for itself as a key referrer of online retail and e-commerce traffic.

But still, this is a company that currently is rumored to make only between $9 million and $45 million in revenue.

Companies with no revenue at all are highly valued.

Snapchat / Apple iTunes

Snapchat is rumored to be raising a new round of funding that values the company at $3.6 billion on paper.

This company has zero revenues.

Zero.

And it's not easy to see how it might make money: It's defining product deletes itself after just a few seconds.

The last time we saw companies with no revenue receiving high valuations from investors was right before the 1999/2000 dot com crash.

Yahoo is again paying top dollar for companies with no meaningful revenue, just like it did in 1999.

Wikimedia, CC

Tumblr's David Karp and Yahoo's Marissa Mayer

Yahoo recently paid $1.1 billion to acquire Tumblr, the social blog network. Tumblr's revenues are so small Yahoo isn't required to mention them in its financial statements — they just don't move the needle.

Again, to be clear, Tumblr is actually an excellent product with 50 million users. But for Yahoo to make money on this deal Tumblr will have to generate profits after sales of greater than $1.1 billion.

My sources tell me that with the right adtech, Tumblr could generate several hundred million in ad sales revenue over the years. But they don't believe Yahoo will ever get its money back on the deal.

This is significant because Yahoo does not have a good track record when it comes to buying in a bubble. In 1999, right before the last tech crash, it bought Broadcast.com for $5.9 billion in stock and GeoCities for $3.57 billion. Neither business had meaningful revenue and both have since been shuttered.

Companies are making dumb decisions: This startup chose beef jerky over a 401 (k) plan.

waitscm | Flickr

The New Yorker recently wrote:

Hunter Walk, an entrepreneur who recently co-founded an early-phase venture firm called Homebrew, told me about a startup where he’d previously worked. The company had needed to figure out whether to spend its limited budget on beef jerky to keep around the office or 401k plans for the staff. “We put it to a vote: ‘Do you want a 401k or jerky?’ ” he explained. “The vote was unanimously for jerky. The thought was that well-fed developers could create value better than the stock market.”

Correction: Walk now tells me that the beef jerky incident happened in 2001. The New Yorker presents the anecdote as if it were current. Nonetheless, there are plenty of companies making dumb decisions. For instance ...

Companies are making dumb decisions (part 2): There are more Facebook ad agencies than regular ad agencies.

Facebook has about 300 so-called Preferred Marketing Developers. They all do one of just four things: Place ads on Facebook, manage Facebook pages for companies, provide social media analytics, and create marketing apps for Facebook. They are basically ad agencies, in the sense that advertising clients hire them to promote their brands via Facebook.

But there are more Facebook PMDs than there are major ad agencies in the U.S., even though the non-Facebook ad business is many times the size of Facebook. Not all of these companies will survive, and a few have recently realized that there is not enough money to support them all. Even Facebook has moved to cull the herd.

Serious investors are beginning to suspect a tech bubble has formed, and that a crash is coming.

UBS

Art Cashin

Art Cashin, the the director of floor operations for UBS Financial Services, has been around the block. He recently worried that he he was seeing things that reminded him of 1999:

"I do worry a little bit that we're beginning to hear things that are reminiscent of the 1999-2000 period—the number of hits, the number of eyeballs," said Cashin, ...

"I think if we hold to the old tried-and-true—how many dollars are coming in—then we might be better served," Cashin said. " But people are extrapolating, in some way, in a manner similar to the way they did in 1999-2000." 

"For an old fogy like me," the trend of extrapolating future earnings based on users and viewers "gets the warning flags flying," Cashin said.

Andreessen Horowitz is pulling up the ladder.

Flickr / coltera

Andreessen Horowitz is is the sine qua non of Silicon Valley investor groups. It had stakes in Facebook, Twitter, Pinterest, Groupon and Zynga. Now it is saying it will no longer invest in early stage consumer-oriented startups.

They're done.

Andreessen is interested more in later stage and business-to-business-oriented companies. Companies with actual prospects of real revenue, in other words.

This, arguably, is the kind of "flight to quality" you often see when asset prices and stocks start falling. What does Andreessen know that we don't?

One of the most legendary tech investors, Tim Draper, thinks we're at the end of the curve.

youtube/2millionminutes

Tim Draper

Timothy Draper is the founder of  Draper Fisher Jurvetson, a venture capital outfit that has invested in dozens of tech startups. He's been around since the days when Hotmail was the big new thing. He recently told The New Yorker that he believed tech venture capital may have reached the top of its cycle:

“I’ll draw you the cycle,” he said, taking my notepad and pen. He scrawled a large zigzag across the page. “This is a weird shark’s tooth that I kind of came up with. We’ll call it the Emotional Market of Venture Capital, or the Draper Wave.” He labeled all the valleys of the zigzag with the approximate years of low markets and recessions: 1957, 1968, 1974, 1983, and on. The lower teeth he labeled alternately “PE,” for private equity, and “VC,” for venture capital. Draper’s theory is that venture booms always follow private-equity crashes. “After a recession, people lose their jobs, and start thinking, Well, I can do better than they did. Why don’t I start a company? So then they start companies, and interesting things start happening, and then there’s a boom.” Eventually, though, venture capitalists get “sloppy”—they assume that anything they touch will turn to gold—and the venture market crashes. Then private-equity people streamline the system, and the cycle starts again. Right now, Draper suggested, we’re on a venture-market upswing. He circled the last zigzag on his diagram: the line rose and then abruptly ended.

"Abruptly ended"?

Let's hope he's wrong.

Read more »

Club Unicornio: Emprendimientos de mil millones de dólares

Welcome To The Unicorn Club: Learning From Billion-Dollar Startups

TechCrunch

ADVERTISEMENT

Editor’s note: Aileen Lee is founder of Cowboy Ventures, a seed-stage fund that backs entrepreneurs reinventing work and personal life through software. Previously, she joined Kleiner Perkins Caufield & Byers in 1999 and was also founding CEO of digital media company RMG Networks, backed by KPCB. Follow her on Twitter @aileenlee. 

Many entrepreneurs, and the venture investors who back them, seek to build billion-dollar companies.

Why do investors seem to care about “billion dollar exits”? Historically, top venture funds have driven returns from their ownership in just a few companies in a given fund of many companies. Plus, traditional venture funds have grown in size, requiring larger “exits” to deliver acceptable returns. For example – to return just the initial capital of a $400 million venture fund, that might mean needing to own 20 percent of two different $1 billion companies, or 20 percent of a $2 billion company when the company is acquired or goes public.

So, we wondered, as we’re a year into our new fund (which doesn’t need to back billion-dollar companies to succeed, but hey, we like to learn): how likely is it for a startup to achieve a billion-dollar valuation? Is there anything we can learn from the mega hits of the past decade, likeFacebook, LinkedIn and Workday?

To answer these questions, the Cowboy Ventures team built a dataset of U.S.-based tech companies started since January 2003 and most recently valued at $1 billion by private or public markets. We call it our “Learning Project,” and it’s ongoing.

With big caveats that 1) our data is based on publicly available sources, such as CrunchBase, LinkedIn, and Wikipedia, and 2) it is based on a snapshot in time, which has definite limitations, here is a summary of what we’ve learned, with more explanation following this list*:

Learnings to date about the “Unicorn Club”:

1. We found 39 companies belong to what we call the “Unicorn Club” (by our definition, U.S.-based software companies started since 2003 and valued at over $1 billion by public or private market investors). That’s about .07 percent of venture-backed consumer and enterprise software startups.

2. On average, four unicorns were born per year in the past decade, with Facebook being the breakout “super-unicorn” (worth >$100 billion). In each recent decade, 1-3 super unicorns have been born.

3. Consumer-oriented unicorns have been more plentiful and created more value in aggregate, even excluding Facebook.

4. But enterprise-oriented unicorns have become worth more on average, and raised much less private capital, delivering a higher return on private investment.

5. Companies fall somewhat evenly into four major business models: consumer e-commerce, consumer audience, software-as-a-service, and enterprise software.

6. It has taken seven-plus years on average before a “liquidity event” for companies, not including the third of our list that is still private. It’s a long journey beyond vesting periods.

7. Inexperienced, twentysomething founders were an outlier. Companies with well-educated, thirtysomething co-founders who have history together have built the most successes

8. The “big pivot” after starting with a different initial product is an outlier.

9. San Francisco (not the Valley) now reigns as the home of unicorns.

10. There is very little diversity among founders in the Unicorn Club.

Some deeper explanation and additional findings:

1) Welcome to the exclusive, 39-member Unicorn Club: the Top .07%

• Figuring out the denominator to unicorn probability is hard. The NVCA says over 16,000 internet-related companies were funded since 2003; Mattermark says 12,291 in the past 2 years; and theCVR says 10-15,000 software companies are seeded each year. So let’s say 60,000 software and internet companies were funded in the past decade. That would mean .07 percent have become unicorns. Or, 1 in every 1,538.
• Takeaway: it’s really hard, and highly unlikely, to build or invest in a billion dollar company. The tech news may make it seem like there’s a winner being born every minute — but the reality is,the odds are somewhere between catching a foul ball at an MLB game and being struck by lightning in one’s lifetime. Or, more than 100x harder than getting into Stanford.
• That said, these 39 companies have shown it’s possible  – and they do offer a lot that can be learned from.
• 
  

2) Facebook is the super-unicorn of the decade (by our definition, worth >$100B). Every major technology wave has given birth to one or more super-unicorns

• Facebook is what we call a super-unicorn: it accounts for almost half of the $260 billion aggregate value of the companies on our list. (As such, we excluded them from analysis related to valuations or capital raised)
• Prior decades have also given birth to tech super-unicorns. The 1990s gave birth to Google, currently worth nearly 3x Facebook; and Amazon, worth ~ $160 billion. The 1980’s: Cisco. The 1970s: Apple (currently the most valuable company in the world), Oracle, and Microsoft; and Intel was founded in the 1960s.
• What do super-unicorns have in common? The 1960s marked the era of the semiconductor; the 1970s, the birth of the personal computer; the 1980s, a new networked world; the 1990s, the dawn of the modern Internet; and in the 2000s, new social networks were built.
• Each major wave of technology innovation has given rise to one or more super-unicorns — companies that could change your life to work at or invest in, if you’re not lucky/genius enough to be a co-founder. This leads to more questions. What is the fundamental technology change of the next decade (mobile?); and will a new super-unicorn or two be born as a result?

Only four unicorns are born per year on average. But not all years have been as fertile:

• The 38 companies on our list outside of Facebook are worth about $3.6 billion on average. This might feel like a letdown after reading about super-unicorns, but remember, startups generally start as ideas that most people think are crazy, dumb, or not that important (remember when people ridiculed Twitter as the place to share that you were eating a ham sandwich?). Only after many years and extraordinary good fortune, a few grow into unicorns, which is extremely rare and pretty awesome.
• Unicorn founding was not front-end-loaded in the past decade. The best year was 2007 (8 of 36); the fewest were born in 2003, 2005 and 2008 (as far as we know today; there are none yet founded in 2011 to today). From this snapshot in time, it’s not clear whether the number of unicorns per year is changing over time.
• It would be interesting to plot the trajectory of unicorns over time  — which become more valuable and which fall off the list — and to understand the list of potential unicorns-in-waiting, currently valued at <$1 billion. Hopefully for a future post.

  
  

  
  

3) Consumer-oriented companies have created the majority of value in the past decade

Venture investing into early-stage consumer tech companies has cooled significantly in the past year. But it’s worth realizing that:

Related Videos

• 
  

  InsideJobs: Pinterest’s Head of Engineering

  7:39
• 
  

  Founder Stories: Dwight Merriman

• 
  

  Keen On… Brad Stone

More Related Videos

• Three consumer companies — Facebook, Google and Amazon — have been the super-unicorns of the past two decades.
• There are more consumer-oriented than enterprise unicorns, and they have generated more than 60 percent of the aggregate value on our list outside of Facebook.
• Our list likely seriously underestimates the value of consumer tech. Of the 14 still-private companies on our list, 85 percent are consumer-oriented (e.g.Twitter, Pinterest, Zulily). They should see a significant step up in value if/when a liquidity event occurs, increasing the aggregate value of the consumer unicorns.

4) Enterprise-oriented unicorns have delivered more value per private dollar invested

• One reason why enterprise ventures seem so attractive right now: the average enterprise-oriented unicorn on our list raised on average $138 million in the private markets – and they are currently worth 26x their private capitalraised to date.
• The companies that seriously improved this metric are Nicira, Splunk andTableau, who all raised <$50 million in private markets and are worth $3.8 billion today on average.
• Plus Workday, ServiceNow and FireEye who are currently worth >60x the private capital raised. Wow.
• Contrary to conventional VC wisdom about enterprise companies requiring more early-stage capital, we didn’t see a difference in Series A dollars raised by enterprise versus consumer unicorns.

Consumer companies have delivered less value per private dollar invested

• The consumer unicorns have raised $348 million on average, ~2.5x more private capital than enterprise unicorns; and they are worth about 11x the private capital raised.
• Companies who raised lots of private money relative to their most recent valuation are Fab, Gilt Groupe, Groupon, HomeAway and Zynga.
• It may just take more capital to build a super successful consumer tech company in a “get big fast” world; and/or, founders and investors are guilty of over-capitalizing consumer Internet companies at too-high valuations in the past decade, driving lower returns for consumer tech investors.

5) Four primary business models drive the value and network effects help

• We categorized companies into four business models, which share fairly equally in driving value in aggregate: 1) E-commerce: the consumer pays for goods or services (11 companies); 2) Audience: free for consumers, monetization through ads or leads (11 companies); 3) SaaS:Users pay (often via a “freemium” model) for cloud-based software (7 companies); and 4) Enterprise: Companies pay for larger scale software (10 companies).
• None of the e-commerce companies on our list hold physical inventory as a key part of their business models. Despite that, e-commerce companies raised the most private dollars on average — delivering the lowest valuations vs capital raised, and likely driving the recent cool down in e-commerce investing.
• Only four of the 38 companies are mobile-first. Not surprising, the iPhone was only launched in 2007 and the first Android device in 2008.
• Another characteristic almost half of the companies on our list share: network effects. Network effects in the social age can help companies scale users dramatically, seriously reducing capital requirements (YouTube and Instagram) and/or increasing valuations quickly (Facebook).

6) It’s a marathon, not a sprint: it takes 7+ years to get to a “liquidity event”

• It took seven years on average for 24 companies on our list to go public or be acquired, excluding extreme outliers YouTube and Instagram, both of which were acquired for over $1 billion in about two years since founding.
• 14 of the companies on our list are still private, which will increase the average time to liquidity to eight-plus years.
• Not surprisingly, enterprise companies tend to take about a year longer to see a liquidity event than consumer companies
• Of the nine companies that have been acquired, the average valuation was $1.3 billion; likely a valuation sweet spot for acquirers to take them off the market before they become less affordable

7) The twentysomething inexperienced founder is an outlier, not the norm

• The companies on our list were generally not founded by inexperienced, first-time entrepreneurs. The average age on our list of founders at founding is 34. Yes, the founders of Facebook were on average 20 when it was founded; but the founders of LinkedIn, the second-most valuable company on our list, were 36 on average; and the founders of Workday, the third-most valuable, were 52 years old on average.
• Audience-driven companies like Facebook, Twitter and Tumblr have the youngest founders, with an average age at founding of 30 (seemingly imminent unicorn Snapchat will lower this average). SaaS and e-commerce founders averaged aged 35 and 36; enterprise software founders were 38 on average at founding.

Co-founders with years of history together have driven the most successes

• A supermajority (35) of the unicorns on our list have chosen to blaze trails with more than one founder — with three co-founders on average. The role of co-founders varies from Co-CEOs (Workday) to technical co-founders who live in a different country (Fab.com). Looking at co-founder equity stakes at liquidity might be another interesting way to look at founder status, which we have not done.
• Ninety percent of co-founding teams comprise people who have years of history together, either from school or work; 60 percent have co-founders who worked together; and 46 percent who went to school together.
• Teams that worked together have driven more value per company than those who went to school together.
• Only four teams of co-founders didn’t have common work or school experience, but all had a common thread. Two were known and introduced by the investors at founding/funding; one team was friends in the local tech scene; and one team met while working on similar ideas.
• That said, the four unicorns with sole founders (ServiceNow, FireEye, RetailMeNot, Tumblr — half enterprise, half consumer) have all had liquidity events and are worth more on average than companies with co-founders.

  
  

Most founding CEOs scale their companies for the long run. But not all founders stay for the whole journey

• An impressive 76 percent of founding CEOs led their companies to a liquidity event, and 69 percent are still CEO of their company, many as public company CEOs. This says a lot about these founders in terms of their long-term vision, commitment and their capability to scale from almost nothing in terms of money, product, and people, to their current unicorn company status.
• That said, 31 percent of companies did make a CEO change along the way; and those companies are worth more on average. One reason: about 40 percent of the enterprise companies made a CEO change (versus 25 percent of consumer companies). And all CEO changes prior to a liquidity event were at enterprise companies that added seasoned, “brand-name” leaders to their helms prior to being bought or going public.
• Only half of the companies on our list show all original founders still working in the company. On average, 2 of 3 co-founders remain.

Not their first rodeo: founders have lots of startup and tech experience

• Nearly 80 percent of unicorns had at least one co-founder who had previously founded a company of some sort. Some founders showed their entrepreneurial DNA as early as junior high. The list of prior startups co-founded spans failure and success; and from tutoring and bagel delivery companies, to PayPal and Twitter.
• All but two companies had founders with prior experience working in tech/software; and only three of 38 did not have a technical co-founder on board (HomeAway and RetailMeNot, founded as industry rollups; and Box, founded in college).
• The majority of founding CEOs, and 90 percent of enterprise CEOs have technical degrees from college.

An educational barbell: many “top 10 school grads” and dropouts

• The vast majority of all co-founders went to selective universities (e.g. Cornell, Northwestern, University of Illinois).  And more than two-thirds of our list has at least one co-founder who graduated from a “top 10 school.”
• Stanford leads the roster with an impressive one-third of the companies having at least one Stanford grad as a co-founder. Former Harvard students are co-founders in eight of 38 unicorns; Berkeley in five; and MIT grads in four of the 38 companies.
• Conversely, eight companies had a college dropout as a co-founder. And three out of five of the most valuable companies (Facebook, Twitter and ServiceNow) on our list were or are led by college dropouts, although dropouts with tech-company experience, with the exception of Facebook.

8) The “big pivot” is also an outlier, especially for enterprise companies

• Few companies are the result of a successful pivot. Nearly 90 percent of companies are working on their original product vision.
• The four “pivots” after a different initial product were all in consumer companies (Groupon, Instagram, Pinterest and Fab).

9) The Bay Area, especially San Francisco, is home to the vast majority of unicorns

• Probably not a surprise, but 27 of 39 on our list are based in the Bay Area. What might be a surprise is how much the center of gravity has moved to San Francisco from the Valley: 15 unicorns are headquartered in San Francisco; 11 are on the Peninsula; and one is in the East Bay.
• New York City has emerged as the No. 2 city for unicorns, home to three. Seattle (2) and Austin (2) are the next most-concentrated cities for unicorns.

10) There is A LOT of opportunity to bring diversity into the founders club

• Only two companies have female co-founders: Gilt Groupe and Fab, both consumer e-commerce. And no unicorns have female founding CEOs.
• While there is some ethnic diversity on founding teams, the diversity of founders in the unicorn club is far from the diversity of college grads with relevant technical degrees. Feels like some important records to break.

So, what does this all mean?

For those aspiring to found, work at, or invest in future unicorns, it still means anything is possible. All these companies are technically outliers: they are the top .07 percent. As such, we don’t think this provides a unicorn-hunting investor checklist, i.e. 34-year-old male ex-PayPal-ers with Stanford degrees, one who founded a software startup in junior high, where should we sign?

That said, it surprised us how much the unicorn club has in common. In some cases, 90 percent in common, such as enterprise founder/CEOs with technical degrees; companies with 2+ co-founders who worked or went to school together; companies whose founders had prior tech startup experience; and whose founders were in their 30s or older.

It is also good to be reminded that most successful startups take a lot of time and commitment to break out. While vesting periods are usually four years, the most valuable startups will take at least eight years before a “liquidity event,” and most founders and CEOs will stay in their companies beyond such an event. Unicorns also tend to raise a lot of capital over time — way beyond the Series A. So these founding teams had the ability to share a compelling company vision over many years and rounds of fundraising, plus scale themselves and recruit teams, despite economic ups and downs.

We tip our hats to these 39 companies that have delighted millions of customers with fantastic products and generated so much value in just 10 years despite a crowded startup environment. They are the lucky/genius few of the Unicorn Club – and we look forward to learning about (and meeting) those who will break into this elite group next.

————-

*  Many thanks to the Cowboy crew who helped with this, including Noah Lichtenstein, Meg He, Lauren Kolodny, Kim Stromberg and Jennifer Gee.

** Our data is based on information in news articles, company websites, CrunchBase, LinkedIn, Wikipedia and public market data. It is also based on a snapshot in time (as of 10/31/13) and current market conditions, which are currently fairly “hot.”

*** Yes we know the term “unicorn” is not perfect – unicorns apparently don’t exist, and these companies do – but we like the term because to us, it means something extremely rare, and magical

**** By our rough definition, consumer companies = e-commerce + audience business models; enterprise companies = Software as a Service + Enterprise business models

***** Our definition of “top 10 school” is according to US News & World Report.

[Illustration: Bryce Durbin]

Read more »